El Salvador delays bitcoin bonds

El Salvador’s launch of sovereign bitcoin (BTC) bonds was intended to commence today but the war in Ukraine may have brought it to a standstill with reported disruption to President Nayib Bukele’s plans.

The 10-year bonds are hoped to increase in value, at the hopeful value of USD 1bn, backed by taxpayer funds providing an annual 6.5% return after expiry.

The cash raised from the sale is reportedly to be used to fund the creation and curation of a project supporting a tax-free haven aimed at tech pioneers and international crypto investors, named ‘Bitcoin City.’

The government hopes the bonds will make a major impact, but Bukele fears that the release of these new bonds will be overshadowed by the ramifications of the war in Ukraine.

The invasion ignited an unexpected economic crash, one that has hit El Salvador hard, especially with the increase in fuel prices. Over the last few weeks, the government has put its focus on battling the price spike on gas, oil and LPG.

It has been reported that in an aim to save the economy from a further crash, the government plans to cut public spending and place caps of fuel prices, providing public transport options.

Bukele took to Twitter to make a statement, explaining he has “enacted 5 reforms that will help reduce the impact of the global economic crisis”.

The Salvadoran finance minister, Alejandro Zelaya, spoke to América Economía, saying the launch of the bond will be most effective from the 15 and 20 of March, stating it was “the right timing” and the tools for the launch were “almost ready”.

He voiced his views around the geopolitical complications, explaining that he, as well as the rest of the world, “hadn’t expected the war in Ukraine”.

If the bonds prove to be successful for El Salvador, the funds raised should make a positive impact on the country, helping to raise the nation from economic distress.

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Updated: 03/15/2022 — 13:00